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17 Patent risk solutions provider RPX yesterday released its 2015 NPE Activity: Highlights report, which offers a first look at trends in patent litigation activity for 2015. Among the key findings from the RPX report are:
- NPE litigation activity rebounded in 2015 following what now appears to have been a slowdown in the latter half of 2014.
- The Eastern District of Texas continues to dominate as the venue of choice for NPEs. NPEs sued more defendants there in 2015 than in any year since 2009.
- Inter partes reviews (IPRs) and covered business method (CBM) petitions filed with the Patent Trial and Appeal Board (PTAB) that have reached final decision on patent validity have been, on average, successful. However, data also show that the PTAB’s institution rates (allowing petitions to proceed to trial) were on the decline in 2014 and 2015.
With respect to NPE litigation activity, RPX reports that both the number of patent infringement cases filed and the total number of defendants sued increased compared to 2014. The top ten NPE defendants for 2015 were Samsung, AT&T, HP, Apple, Dell, LG Electronics, Amazon, HTC, Lenovo and Sony. The top ten NPEs by defendants sued were Leigh M. Rothschild, eDekka, IPNav, Empire IP, Wi-LAN, CyrptoPeak Solutions, Shipping & Transit, Hawk Technology Systems, Olivistar and Acacia Research.
With respect to the Eastern District of Texas continuing to be the venue of choice for patent plaintiffs, RPX reports that “NPEs sued more defendants in the Eastern District of Texas in 2015 than in any year since at least 2009.” RPX attributes this in part due to rumors of possible venue reform, which could potentially account for the spike in litigation filings during June 2015, when talk of venue reform was most prominent in Congress. Still, the chart below tells an ominous tale.
NPE Campaign Defendants Added by Venue
Over 60% of NPE defendants find themselves defendant patent infringement litigations in the Eastern District of Texas, which is headquartered Tyler, Texas, population approximately 100,000.
In November 2015, IAM hosted a Patent Policy event in Washington, DC. Speaking on one of the panels was Phil Johnson, who is Senior Vice President for IP Policy and Strategy with Johnson & Johnson. When the discussion turned to patent litigation, Johnson cut straight to the heart of the matter. “When I hear people say we don’t trust some of the district courts… they generally mean the Eastern District of Texas, because unless we because unless we mandate what they’re going to do they’re not going to follow this and so we have to have a statute,” Johnson explained. “We can’t leave it to their discretion.”
Johnson’s criticism was direct and perhaps more forceful than some are familiar with, but the sentiment expressed in his words is widely shared within the industry. There is great frustration with the Eastern District of Texas, and it seems that much of the patent reform discussion is due to very real and legitimate frustrations with the Eastern District of Texas.
I find it particularly troublesome that reforms being discussed would weaken patent rights and make it difficult, if not impossible, for patent owners to seek redress for legitimate cases of patent infringement. The problem, to the extent there is any widespread problem, is with abusive conduct by a small number of players. Something can be done to eliminate that abusive conduct, but if and only if something is done to address the Eastern District of Texas.
There is something fundamentally unfair, practically un-American, about having a remote, rural area of Eastern Texas be the court that disproportionately handles patent infringement cases. For crying out loud, whenever a question is raised about whether it makes sense in the specialized world we live into today to have specialized courts everyone protests vehemently. I understand the Constitutional concerns, but we de facto have a specialized patent infringement court in the Eastern District of Texas.
Johnson summed up this problem perfectly; referring to it is one of judge shopping, as he calls it. He explained:
Right now the Eastern District has different rules than pretty much anywhere else and as I understand it under the standing Order… all patent cases that are filed in Marshall are assigned to Judge Gilstrap, 100% of them. So essentially what plaintiffs are being told is if you file in Marshall you’ll get Judge Gilstrap and Judge Gilstrap has an overwhelming number of patent cases compared to any other judge in the country. I think he may have 1300 or 1400 cases, maybe more than that. He may have as many as 15-20% of all patent cases filed. I think we could agree, and this is without commenting on Judge Gilstrap himself or what he does as a judge, but I think we could agree that in our judicial system two things I think have always been evident. First of all, a plaintiff may have the right to choose where the case is brought, if not who the judge is who hears the case. Number two… no single judge should have a disproportionate percentage of patent cases. You should have those cases spread around so you have the development of different ideas, which can add to the law… as we do everywhere else.
The full report includes information and insight on NPE litigation volume, top plaintiffs and most targeted defendants, patent validity challenges (IPRs and CBMs), and the size of patent portfolios offered for sale.
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Join the Discussion
17 comments so far.
A Rational Person
January 8, 2016 10:34 amGene@15
I also think you, as well as I, could not foresee that the Federal Circuit would decide that they could effectively take “judicial notice” of so many things. The Federal Circuit is no making decisions that could only properly be made based on factual evidence and citing no factual evidence supporting their opinions. The Federal Circuit in many cases is treating the Mayo/Alice 101 test as a way of making enablement decisions under 35 USC 112 and obviousness decisions under 35 USC 103 without the need to determine, based on facts, the state of the prior art and what an personal of ordinary skill in the art would know in the field of the claimed invention.
For example, take the very recent Vehicle Intelligence v. Mercedes-Benz USA case, in which the Federal Circuit found the claims to be abstract based on the following reasons:
“They [the claims] do not explain how the “time-sharing allocation” on a processor should be done. And they do not explain how the expert system works to screen for impairments or how such systems can be portioned out over one or more equipment modules. The claims merely state the abstract idea of testing an equipment operator for impairments using an unspecified “expert system” running on equipment that already exists in various vehicles. This is not sufficient to pass Mayo/Alice step two. See Alice, 134 S. Ct. at 2355.”
If the the claims were being rejected based on the enablement requirement of 35 USC 112, an applicant could potentially provide evidence showing, that based on the state of the art in this field, none of the “explanations” required by the Federal Circuit would be necessary for a person of ordinary skill in the art to implement to claimed invention based on what is described in the specification and shown in the drawings.
But, because this is a 35 USC 101 rejection, the Federal Circuit is rejecting the claims based on what could be called the “technologically ignorant judge/justice reading the patent enablement requirement of 35 USC 101,” i.e., whether a technologically ignorant judge can determine if the claim is enabled based only on what is explicitly disclosed in the patent document.
Furthermore, because the Federal Circuit “technologically ignorant judge/justice reading the patent enablement requirement of 35 USC 101” is in every way a more difficult standard to meet than the enablement requirement of 35 USC 112, the Federal Circuit has effecively held in Vehicle Intelligence that the enablement requirement of 35 USC 112 is no longer necessary.
I think it is easy to understand that neither of us could envision that that the Federal Circuit would go so far as to use Alice/Mayo to gut the enablement requirement of 35 USC 112.
Night Writer
January 8, 2016 12:52 amI predicted that the SCOTUS was going to give the lower courts a case where the claims could be invalidated on SJ with “abstract”. I predicted this when I read Rader’s opinion in the Bilski en banc opinion. The other thing I was right about was that Obama was going to stack the courts after O’Malley. Obama was wrongly convinced that patents were a problem and had Kappos resign. (Stoll is not a stack, but a token as a Rader replacement.) But, I think it was Taranto that did not participate in Bilski because he said that he was too new and it was so contentious. But, Moore predicted how bad it would be in the en banc opinion. What happened was that the SCOTUS legislated Alice and Obama stacked the fed. cir. Stack is really not an exaggeration. All the judges between Taranto (inclusive) and Stoll (not inclusive) had expressed very strong anti-patent opinions and were vetted by Google. I am sure that Obama got on the phone with each of them and said before the appointment something like, “Now we are having some problems with patents.” Candidate for fed. cir. responded (or was not nominated), “Mr. President, I know. We need to get the patent situation under control.” One saving grace we had was the former solicitor couldn’t bring himself to eat the Alice nonsense.
Now we have a fed. cir. that is close to hopeless. (I will say that I have seen some signs that as the judges learn a little science and patent law that they seem more reticent to go along with Alice.)
But, let’s face it. Alice is psychotic nonsense. And, the Fed. Cir. has bought into it hook, line, and sinker. It would be hard for them to reverse course at this point. And they have lots of other avenues such as functional claiming, removing what a person of ordinary skill in the art knows, ignoring hindsight reasoning, 112 for reissues, etc.
The biggest worry right now should be what Lee is going to do before Obama leaves.
Gene Quinn
January 7, 2016 03:41 pmA Rational Person-
Yes, I agree. That is why I was so upset by the Supreme Court’s decisions in Bilski, Mayo, Myriad and Alice. Attorneys in the computer and biotech space all called me crazy and that I was over reacting, but it was incredibly easy to predict what would happen. The decisions are so poorly reasoned it was practically guaranteed to allow those philosophically opposed to patents to use the decisions to kill patents. To the extent I was wrong it was because I under predicted how bad the decisions would be. I thought the Federal Circuit would stand up and limit the decisions to their facts. Even the pro-patent judges on the Federal Circuit seem to be going along almost as if putting their foot on the accelerator. OK Supreme Court. If that is what you want, let’s just kill everything.
I guess it has to get worse before it starts to get better.
A Rational Person
January 7, 2016 11:45 amGene@2
“Patent litigation is a mess. Between rampant anti-patent sentiment and the absurdity of having a remote part of the U.S. being the de facto primary technology courthouse, things almost couldn’t get much worse.”
Remember the “bad ol’ days” before the creation of the CAFC when many district courts never found a patent both valid and infringed and the most important thing to do in a patent litigation was to win the fight on venue?
Just a little more than 30 years later, and we are pretty much back to where we started.
A Rational Person
January 7, 2016 11:01 amNight Writer@7
“I know it sounds dramatic, but image an Alice type of law for criminal law. The judge just goes back in their chamber and with no evidence just decides whether or not you are guilty or innocent.”
Actually, but it’s even worse than your hypothetical. You forgot about include the fact that “Alice type of law” not only means ignoring evidence but making up law.
So, here’s a expansion of your hypothetical: A judge decides that someone recklessly crashing their car into you resulting in his/her car being totaled makes you guilty of committing “manslaughter” because the judge decides that car is a “person” under your state’s statute for manslaughter and the judge decides the car being totaled is your fault, without considering any evidence of who caused the accident, because the judge doesn’t like you.
staff
January 6, 2016 06:09 pm‘There is great frustration with the Eastern District of Texas…’
Sure, for large invention thieves. Don’t believe their lies. If infringers don’t want to be sued in EDTX, don’t infringe there and then have a connection with the district. Inventors understand and will tell you it has always been the case in western law that when one’s rights are trespassed the plaintiff has a right to file where their rights are trespassed. If we are robbed or mugged in Albuquerque or Marshall, we have a right to sue there.
Also, we question the RPX claims of any increase in NPE or any other litigants. For example, what does ‘defendants added’ mean’? They use the phrase, but do not explain it. Inventors and their attorneys will tell you the number of ‘parties sued’ which is all that matters has substantially dropped since AIA. Don’t believe the lies of thieves like RPX and their large Chinese and multinational client base who for years have been ransacking, looting and crushing their small competitors.
All this patent troll and ‘reform’ talk is mere dissembling by China, huge multinational thieves, and their paid puppets. If you tell a lie often enough and can dupe others to repeat that lie, eventually it is accepted as fact. As Mark Twain said, ‘truth is not hard to kill, and (that) a lie well told is immortal’. Those who use the amorphous phrase ‘patent troll’ or NPE expose themselves as thieves, duped, or doped and perpetuate the lie. They have already damaged the American patent system so that property rights are teetering on lawlessness. Simply put, their intent is to legalize theft -to twist and weaken the patent system so it can only be used by them and no one else. Then they can steal at will and destroy their small competitors AND WITH THEM THE JOBS THEY WOULD HAVE CREATED. For the last several years now they have been ransacking and looting small entities taking everything they can carry. Meanwhile, the huge multinationals crafting these lies ship more and more American jobs to China and elsewhere overseas. When they cant export jobs, they import workers.
For more information please visit us at https://aminventorsforjustice.wordpress.com/
or, contact us at [email protected]
Kevin
January 6, 2016 04:58 pmRegarding the increase in patent litigation in 2015.
It’s very simple.
Defendants have no incentive anymore to settle ahead of litigation. AIA (Patent Reform) and recent case law has removed that incentive.
They now live by the term ‘efficient infringement’.
RPX is misleading everyone with that data really.
Provide pre litigation incentive to settle and you will see less litigation.
Hopefully the new president will be pro Patents.
Anon
January 6, 2016 11:12 amApparently, we really do NEED to crash the system before we can (willingly) recognize the fundamental errors involved in the separation of powers fiasco that the 101 nose of wax has become.
Night Writer
January 6, 2016 07:32 amMichael J. Feigin>That’s certainly not good news that a district doesn’t grant motions to dismiss when there are so many patents that are now huge 101 problems.
“[D]oesn’t grant”? What does that mean? You think Alice was some type of order from the monarch to exterminate patents? Alice is not law but equity. It gives free rein for a judge to decide to invalidate any patent they don’t like. Yes I know I am exaggerating, but this is pretty close to the truth.
You get the irony, right? That the SCOTUS legislated with Alice (essentially a summary execution order for all patents) but the means was discretion of the judge–equity. Now, some of the judges aren’t doing what was they were supposed to do. What do you do? Pretty funny. How about taking the Constitutional way out of this. The SCOTUS reverses Alice and it progeny and let the Congress handle the enacting law part.
What you are seeing is the breakdown of our system due to the influence of money and the rise of corporations that are becoming more powerful than our government. The SCOTUS should never have legislated Alice.
Curious
January 5, 2016 07:05 pmIn terms of why the Eastern District of Texas is viewed as plaintiff friendly, I believe if you look at the verdicts there they can be quite high. They also can be low or non-existent. But if you are looking for a grandslam homerun that is probably one of the more likely places to achieve it.
My understanding is that it is less the dollar amounts and more the greater pressure the judges put on the parties to settle. As you noted, they are less likely to grant motions to dismiss, which means that the cases will go to a jury. As an FYI, I talked to a litigation attorney some time back and he stated that while the ND Cal. is a known “defendant friendly” jurisdiction (because they liberally grant motions to dismiss), the jury verdicts tend to be higher there than other places.
Patent litigation is a mess.
Because of the stakes involved. Anytime a litigation can cost a company tens or even hundreds of millions of dollars, there is an huge incentive to fight tooth and nail, and fighting tooth and nail is what makes patent litigation a mess.
That’s certainly not good news that a district doesn’t grant motions to dismiss when there are so many patents that are now huge 101 problems.
In your opinion. In my opinion, neither the District Courts or the Federal Circuit have heeded the Supreme Court’s warning in Alice to “tread carefully in construing this exclusionary principle lest it swallow all of patent law.”
Night Writer
January 5, 2016 05:13 pmThe bottom line is that Alice is not Constitutional and with each Alice and executive order that is created we slip further away from our democracy and freedoms. I know it sounds dramatic, but image an Alice type of law for criminal law. The judge just goes back in their chamber and with no evidence just decides whether or not you are guilty or innocent.
Michael J. Feigin, Esq., http://PatentLawNY.com
January 5, 2016 03:24 pmThat’s certainly not good news that a district doesn’t grant motions to dismiss when there are so many patents that are now huge 101 problems.
The federal rules about proper venue are kind of outdated at this point. A shmo selling something on Amazon can now be sued anywhere in the country. I don’t have an idea for a fix, but it should be more related to where the person / company is located than where they’ve happened to make some of their sales without even trying.
Gene Quinn
January 5, 2016 02:31 pmNight Writer-
I understand what you are saying, and I share the frustration that district courts are trashing patents left and right on motions to dismiss for lack of patent eligibility. But frankly, what are they supposed to be doing? The Federal Circuit has abdicated its responsibility (in my opinion) and rather than giving guidance and filling in the many blanks left by the Supreme Court (who has only decided financial software patents) is just saying “no patent for you because all software is abstract because it is abstract because it can be programmed by a second year engineering student because it is abstract.”
The problem with the Eastern District of Texas predates Alice and even predates Bilski. They have run their own little fiefdom in the patent space for a very long time. It should be that way then, and it should be that way now.
Of course, none of this should be this way, period.
-Gene
Night Writer
January 5, 2016 01:46 pmIt is kind of like saying, gee we have all this new case law so we can invalidate all the patents by equity and this one district didn’t get the memo to trash all patents. Just too funny.
Night Writer
January 5, 2016 01:43 pm>unless we mandate what they’re going to do >they’re not going to follow this and so we have to >have a statute,” Johnson explained. “We can’t >leave it to their discretion.”
Belly laugh! Funny isn’t it? You make “patent law” with cases like Alice that allow a judge to do whatever they want and soon you end up with no laws. You just have judges that do whatever they want. And how hypocritical to fault them for it. If the SCOTUS, Fed. Cir., and President are going to do whatever they can get away with, then why shouldn’t district courts as well.
What a joke this country has become. You notice too that the problem is framed as one of an imperial commander wanting to control the purpose of the judges. Not a person that is thinking the problem here is that we no longer have laws but equity rules that allow judges to do whatever they want.
Gene Quinn
January 5, 2016 12:22 pmCurious-
In terms of why the Eastern District of Texas is viewed as plaintiff friendly, I believe if you look at the verdicts there they can be quite high. They also can be low or non-existent. But if you are looking for a grandslam homerun that is probably one of the more likely places to achieve it.
Also, I believe the Eastern District Judges refuse pretty much every dispositive motion, which means the cases will either settle or go to trial. With so many district courts granting motions to dismiss based on patent eligibility having the prospect of being able to overcome even that hurdle is certainly pro-plaintiff.
Patent litigation is a mess. Between rampant anti-patent sentiment and the absurdity of having a remote part of the U.S. being the de facto primary technology courthouse, things almost couldn’t get much worse.
-Gene
Curious
January 5, 2016 11:03 amThe question(s) that should be explored is WHY do plaintiffs go to ED of Texas for patent litigation? What sets the ED of Texas apart from other jurisdictions?
Obviously, there is something deemed “plaintiff friendly” about ED of Texas. What is it?
There are two (actually three) ways to address the issue of a flood of patent litigation to ED of Texas. Either the ED of Texas can become more like other jurisdictions or other jurisdictions can be more like ED of Texas. Without knowing the differences, we shouldn’t automatically assume that the ED of Texas is doing it wrong. (The third way is just to file a motion transfer jurisdiction to someplace else — these DO get granted).
Ultimately, unless we institute a judicial system in which “local rules” are eliminated and everybody is playing by the same set of rules, there will always be a “most patent friendly” jurisdiction. It may not be self-evident at first, but ultimately patent litigations will shift to where the local rules are most favorable to plaintiffs.